There was a lively debate in the comments section of my October post titled: The Army CCA applies Cimball Sharpton to (erroneously) affirm larceny from a debit card holder. In my post I argued that a service member’s fraudulent use of another person’s debit card was a larceny from the merchants where the card was used, and not from the account holder, even when the fraudulent use of the card caused a reduction in the account holder’s balance, and I concluded that the Army CCA was wrong to affirm (in a published opinion) an appellant’s guilty plea to larceny from another service member based on such fraudulent activity.

That conclusion drew some thoughtful opposition in the comments section, but I stuck with my analysis. The appellant petitioned CAAF for review on December 3, 2014 (No. 15-0202/AR), so it will likely be a few more months before we learn if I was right.

But an article published in the November issue of the Army Lawyer adds support to my argument:

In the case of a debit card relationship, an account holder has deposited money with the bank against which the POS or ATM transactions are drawn; however, due to the military courts’ application of commercial law principles, the account holder is not the “owner” of her deposits within the meaning of Article 121. Absent special arrangements, the title to the money deposited is transferred to the bank when a deposit is made by the account holder into his her account.

This is true because money deposited with a financial institution, absent special arrangements, is considered a general deposit. In the case of general deposits, “[t]he general transaction between the bank and a customer in the way of deposits to a customer’s credit, and drawing against the account by the customer, constitute the relation of creditor and debtor.” As such, there “is nothing of a trust or fiduciary nature in the transaction, nor anything in the nature of a bailment . . . or in the nature of any right to the specific monies deposited.” Thus, the account holder has neither title to nor possession of the money in his or her debit account—only an agreement from the bank “to pay an equivalent consideration when called upon by the depositor in the usual course of business.”

The same is true in the case of a credit card agreement. The relationship between the bank and the account holder is one of creditor and debtor—the roles being reversed such that the account holder, not the bank, is the debtor. Just as in a debit card relationship, the credit-card account holder has neither title to nor possession of the line of credit that is extended by the bank.

Major Benjamin M. Owens-Filice, “Where’s the Money Lebowski?” — Charging Credit and Debit Card Larcenies Under Article 121, UCMJ, Army Law., August 2014, at 3, 9 (direct link to article).

The article is a comprehensive review of this topic, and it includes a handy chart on the last page. I think the article is entirely consistent with my October post, and I encourage anyone litigating a larceny case to read both the article and my post.

13 Responses to “Military justice scholarship about larceny involving credit & debit cards”

  1. Tacitus says:

    The article is right on the money.  The President understands the nature of bank accounts as demonstrated by his explaination of who the victim usually is in a debit, credit, or electronic transaction.  CAAF apparently recognizes this as indicated by Lubaski, Cimball Sharpton, and its summary disposition in Gaskill.  Yet the Army Court is still comparing debit card larcenies to pick pocketing because they fail to see the obvious unifying principle.

  2. stewie says:

    The article certainly restates the current view. I think the discussions before were that the current view is hyper-legalistic and violates common sense and is unnecessary. I’d also question whether “owner” under secured transactions necessarily means the same as “owner” for purposes of larceny. But, again, no one I think disputes that ACCA’s decision is contrary to established case law.  I’m not sure the explanation in the MCM is anything more special than putting in black and white what the established case law is. This article points out some of the same incongruities in Cimball Sharpton that ACCA did, so it isn’t quite all neatly wrapped in a bow.

  3. TC says:

    I filed a Pro Se petition for the AFCCA to review my case.   My case, dating back 10 years ago dealt with the transfer of a member’s salary to a charity in Russia.  The money was sitting at DFAS when it was redirected.  Question is whether it was military property as charged and if Tree is the Victim under the standard of Cimball Sharpton.  Although CAAF has said that BAQ/BAH is military property “clearly distinguishable from salary” this is indeed earned salary.  Tree was not paid until months later.
    On the way of researching this issue I found out my Appellant Counsel did not challenge the larceny charge (like I asked him too).  I filed a supplemental that Grostefon was not complied with and attached emails where I specifically asked that the charge be challenged.
    Now here is a pickle, what will the Air Force Court do?  (1) Deny – challenge to the larceny charge, it would not have mattered or (2) require that new briefs are filed to comply with post-trial review?  Seems like no. one is their preferred choice.  But it should not matter if the larceny charge would have been resolved in my favor or not, I should be able to brief the issue. Another obstacle – I am no longer in the military.  If relief is granted, or even better they order a DuBay hearing, how the heck would this play out if they set aside the judgement, even just temporary?  Would I be required to be returned to active duty, even just to satisfy Article 66?
    Too many Questions.

  4. Tami (a/k/a Princess Leia) says:

    This article doesn’t do anything to advance the argument that debit card transactions should be treated the same as credit card transactions WRT larceny.  The article repeatedly distinguishes the two, in that the money at issue in a credit transaction is not owned by the card holder, and consistently implies the money at issue in a debit card transaction is owned by the person named on the account (which makes sense).  Lubasky remained convicted of the larcenies involving the debit card transactions.
    Can anyone seriously doubt that the money in the bank in my checking account is NOT owned by me?  If I do not have a superior interest in MY money in MY bank account, as compared to the bank’s interest, then I would never be able to withdraw MY money from MY account.  If I wanted to, I could take MY money from the bank, close MY account, and I have no obligation to repay the money, because it is MY money, unlike a credit transaction, where I am borrowing someone else’s money, and I have an obligation to repay.
    There is no doubt that “or another person” refers to someone else with a possessory interest in the money.  There is no doubt that the person named on a bank account has AN interest in the money that is superior to the thief’s.  Why not charge larceny from the person named on the account?  Avoid the hyper-technical, hyper-legal mumbo jumbo that requires expert testimony and just leaves the fact-finder wondering why the Government didn’t charge larceny from the account holder.
    Anyone feel comfortable relying on case law from the 1860-1900s to support their arguments, either way, on charging larceny via credit or debit cards?

  5. stewie says:

    Well, look, I don’t feel “uncomfortable” simply following the manual and going with what is there. I don’t think you go wrong doing that the vast majority of the time. I might think we could give more freedom/room to government counsel to adjust who the proper victim is, but the reality is, it is fine to leave it as is too. It certainly would follow what the President laid out, and it keeps things simple. Government is still free to use the account holder on sentencing, and can probably still use him on the merits *yes that was my account, yes here is how I found out money was missing and I wasn’t the one who spent it.

  6. Tacitus says:

    Tami:  You need not rely on 1860-1900s case law to demonstrate that your bank deposits do not belong to you.  It is a concept very much alive and well today in bankruptcy law, commercial transactions, and the FDIC.  If it were not for the FDIC, you would have no right to the value of your funds from a failed bank ahead of secured creditors or other creditors with superior interests in the bank’s assets.  This is because bank account holders are unsecured creditors with no title to bank assests (which includes deposits).  No doubt, the value of a bank account holder’s claim is valuable indeed.  However, this claim, according to the Supreme Court, is a form of intangible personal property and not an interest in specific funds held in the bank’s general fund. 

  7. stewie says:

    True, but assume a bank doesn’t fail, they simply shut down. They have enough money to cover all their creditors AND pay the balances in all the banking accounts.  Are you saying they could just say no, we’ve got the money but we won’t pay back the account holders (ignoring the FDIC protection)?  I would think not.  The account holder has SOME right to the value of the funds, it’s just that right is deeply buried behind more protected creditors under the law. 

  8. Tami (a/k/a Princess Leia) says:

    MAJ Filise is the one who relies on century-old case law to support his argument about credit and debit card transactions, and even he, ironically, differentiates between credit card transactions and debit card transactions.
    I think a lot of people are getting confused over the definition of “owner” and “possession and “any other person.”  An “owner” is someone who has a “right” to possess the property, and that “right” is superior to the thief’s “right,” which is zero.  Whether I have physical possession of MY money is irrelevant, if MY money is being held by a bank in an account with MY name on it, as per MY agreement with the bank, and someone comes along to take that money without MY permission, then that person has stolen from ME.  That person has stolen from the bank too, but the bank having physical possession of MY money does not eliminate MY right to possess the money, because since it’s MY money, I can take MY money anytime I want, because it is MY money.  MY right to possess the money is superior to the thief’s.  It doesn’t matter what MY right is, as compared to the bank’s right, because BOTH the bank and I have rights that are superior to the thief’s.
    “Any other person” means ANY person who has possession (i.e. physical) OR a GREATER RIGHT to possession than the accused.  My right to possess the money is greater than the thief’s right, because I can withdraw MY money from the account anytime I want, for any reason, or even no reason at all, while the thief doesn’t get to withdraw MY money anytime, for any reason.
    If I lose my debit card, and someone finds it and uses it to buy a $10 pizza from Domino’s, I am still a victim of larceny because I didn’t receive the pizza that was bought with MY money, even though I had a greater right to that pizza than the thief had, because it was MY money that paid for that pizza.  Domino’s loses all of its possessory interest in the pizza the moment it receives the bargained-for consideration–$10.  That is basic contract law.  Therefore, the thief’s possessory interest in the pizza is greater than Domino’s, but the thief’s possessory interest in the pizza is not greater than mine, because the thief had no right to MY money that was used to pay for the pizza to begin with.  Therefore, I don’t see how Domino’s can be included as an “owner” of the pizza, as there was no theft of the pizza itself.  There is no “theft of goods.”
    To say I have no possessory right to my money, simply because the bank has physical possession of my money, and therefore a thief can’t be prosecuted for stealing from me, and can only be prosecuted for stealing from the bank, defies logic and the law.  Otherwise, the following would be true:
    1.  I would be a thief every time I withdrew money from my account in the bank, because the bank, as the “owner” of the money, is the only “person” with the right of possession, even though I am the person who earned that money, and my boss requires me to have a bank account to deposit MY money directly into the bank, because my boss doesn’t want to write me a check that I can cash to physically possess MY money.
    2.  If my debit card is linked to my savings account, and a person uses that card to remove money from my savings account, then the bank couldn’t be an “owner” because my right to that money is greater than the banks.  With savings accounts, the bank is actually borrowing MY money so it can lend that money to others, who will pay more in interest to the bank, than the interest the bank will pay to me, for the privilege of borrowing MY money.
    3.  What if my money was in a n entity not FDIC insured, i.e. state credit union?  Why does my possessory interest in MY money depend on insurance?  It DOESN’T!  The only thing insurance means is that the offense isn’t as aggravating if there is insurance, versus the account holder is SOL without insurance.
    It’s not hard to see that, in larcenies involving debit card transactions, the Government has multiple options in charging decisions.  The Government shouldn’t be penalized for choosing the option that was the easiest to prove and understand.
    Another flaw in the article is the comment about giving up “title” because the money is in the possession of the bank.  If my boss forces me to have an account for my paycheck to go in, then I would never have a possessory interest in that money, because I would never receive “title.”  And what about something like a car, where I have borrowed money to purchase a car, and the bank who loaned the money to me has the title to that car?  If someone steals MY car, then the Government could never charge larceny from me, because I never had a greater possessory interest than the thief, even though I was in physical possession of the car, the car is registered and licensed in my name, and I paid all but $100 of the loan, simply because I did not have the title.  And what about states where the title is registered electronically instead?  Many states do not issue paper titles for vehicles.  Assuming I pay the car loan off, I still would never have a greater possessory interest in the car, simply because I don’t have physical possession of a title.

  9. Zachary D Spilman says:

    I know we’re unlikely to agree on this Tami, but you’re focused on the wrong thing. As I wrote in my analysis of Endsley, the debit card is a credential (that is, a form of identification), and a person who misuses another’s debit card is presenting fraudulent credentials to obtain things from a counter-party (that is, a merchant or a bank’s teller/ATM).

    Once you accept that a card is a credential, CAAF’s jurisprudence makes perfect sense.

  10. stewie says:

    Well Zach that’s ONE way of looking at it. There are other, perfectly logical ways of looking at it.  The bottom line is, the MCM (President) has set it up one way, and CAAF has reinforced that.  That’s the way it’s likely going to be.  ACCA IMO is logically right, but the ultimate result is going to be that their logical view won’t hold. 
    The greater question is, is there really a need to limit it this way, which is what I think Tami, and I, and even ACCA are suggesting.  I think the answer is, no, not really. If the MCM and CAAF said, sure, the account holder can be a victim too, I don’t think anyone would lose any sleep over it as illogical or nonsensical.

  11. stewie says:

    And for clarity, I’m not suggesting the current path isn’t logical, it is as well.  Perhaps unnecessarily narrowed, but perfectly logical.

  12. Tacitus says:

    The essential issue is CAAF’s precedent that Art 121 only prohibits the theft of tangible property.  Every aspect of Tami’s argument is correct, but for the recognition of that.  A contractual right to demand payment is as enforcible, and intangible, as a royalty, bond, copywrite, etc.  Valuable as these interests may be, they assert only a claim to a certain value, and not a claim to the specific funds/property at issue as Art 121 and the MCM require.  So unless CAAF overrules its precedent, deposits cannot be stolen from the depositor absent special circumstances rarely present.

  13. stewie says:

    Of course, I think it’s also fair to say those special circumstance don’t really turn the “intangible” “tangible”, we’ve just decided they are special and deserving of an exception.